The quarterly report is an in-depth compilation of office leasing statistics, major transactions, submarket comparisons, employment results and investment and development trends specific to the Chicago CBD region.

Following a strong close to 2016, Chicago leasing fell by 19.3 % to 2 msf in the first quarter. At just under $700 million, sales activity at the start of 2017 registered the weakest quarterly volume since the first quarter of 2013. A slowdown in the pace and volume of Chicago office transactions in 2017 corresponded with rising asking rents and operating costs.

Class A average asking rent jumped by 2.6 % to $43.09 for the first quarter of 2017, as view space in trophy towers is commanding mid-$50 rents (gross). Increased operating costs have followed the recent amenities race between Chicago CBD landlords, as Class A average total rent reached a peak of $50.35 in 2016 according to the Savills Effective Rent Index.

After rising 2.9 % in 2016, real estate taxes are expected to only continue to grow following the reassessment of buildings sold in the last cycle and to support the state and city’s well-documented budget challenges.

Chicago CBD Class A and Overall availability rates both ticked down in Q1 2017, but are still slightly above Q1 2016 levels. For prospective tenants seeking Class A space, opportunities are limited in the short term. The most recent wave of trophy towers constructed or delivering within the next year are 74.4 % leased, and the next wave of new trophy space is not expected to deliver until 2019 or later.

Transactions within Far West/Fulton Market and West Loop submarkets continue to make headlines, accounting for 6 of the 10 largest deals of Q1 2017.

The 2017 Q1 Savills Studley Chicago CBD Office Market Report as well as a national report and reports for each of the 29 major U.S. markets can be found at www.Savills-Studley.com.